RMD requirements for a rehire

[Guest LHaskell]

I have an employee who previously terminated, reached age 70 1/2 and began receiving RMD's. They have since became a rehired employee. What are the rules now on the RMD requirements? Do they have to continue taking RMD's or can they waive them while employed? If they can waive them, how would this officially occur?

[PensionPro]

Regs are not clear, plan doc might help.

[Tom Poje]

Last year's ASPPA Conference (2010) the following was asked

Question:

Required Minimum Distributions and Rehires - There does not appear to be

guidance on how to handle required minimum distribution payments when

an employee is rehired. For example, a 71-year old employee retires in 2010

and is rehired in 2012 at age 73. The employee had begun to receive RMD

distributions, and now upon his rehire he would like to suspend payments

until his ultimate retirement. Is it permissible to suspend his RMD payments,

provided the plan document has language that so permits?

IRS Response:

No clear position in the regulations about what constitute retirement, and there is also not any

guidance that permits stopping and restarting. Therefore, it appears that the circumstances at

the initial retirement controls.

(Page 6 of the handout, ASPPA doesn't appear to number them anymore)

[Guest LHaskell]

Thanks so much!

Last year's ASPPA Conference (2010) the following was asked

Question:

Required Minimum Distributions and Rehires - There does not appear to be

guidance on how to handle required minimum distribution payments when

an employee is rehired. For example, a 71-year old employee retires in 2010

and is rehired in 2012 at age 73. The employee had begun to receive RMD

distributions, and now upon his rehire he would like to suspend payments

until his ultimate retirement. Is it permissible to suspend his RMD payments,

provided the plan document has language that so permits?

IRS Response:

No clear position in the regulations about what constitute retirement, and there is also not any

guidance that permits stopping and restarting. Therefore, it appears that the circumstances at

the initial retirement controls.

(Page 6 of the handout, ASPPA doesn't appear to number them anymore)

[masteff]

That's a curious outcome since in the past we've discussed on this board that someone over 70 1/2 and actively working could roll in from an IRA or other employer's QP and thus avoid future year's MRDs. Edit: of course I note that I reached the same point of ambiguity 4 years ago. http://benefitslink.com/boards/index.php?showtopic=36487

http://www.irs.gov/irb/2004-07_IRB/ar08.html "However, a distribution of amounts attributable to a rollover contribution is subject to the survivor annuity requirements of §§ 401(a)(11) and 417, the minimum distribution requirements of § 401(a)(9), and the additional income tax on premature distributions under § 72(t), as applicable to the receiving plan."

[Guest KTP]

See this 2012 presentation found on the IRS's website: http://www.irs.gov/pub/irs-tege/forum12_taxing_matter.pdf

Slide 21 addresses the question above on pages 38-39 of the .pdf. The commentary at the top of page 39 indicates that the participant does not need to take an RMD following rehire, so long as the RMD would be made from the plan of where he/she is working.